Answer extracted from The Single Source podcast — listen to the full episode below.
What makes a 25% return hurdle work in a concentrated India equity strategy?
Duro Capital's concentrated strategy underwrite every portfolio holding to a 25% return hurdle, selecting only businesses with defensible competitive advantages, structural tailwinds enabling 25%+ earnings compounding, and valuations below intrinsic value. With just 15 to 20 positions where the top 10 form 70–75% of assets, each name must clear this quantifiable threshold to justify its place in the portfolio.
The three pillars of the investment thesis
Goel structures the selection criteria around three concrete pillars. First, the strategy focuses on businesses with what he calls a "defensible right to win" — competitive advantages that can withstand irrational competition. This foundation determines whether a business can sustain its market position over time, not just capture temporary share.
Second, the fund looks for structural change enabling 25%+ earnings compounding during its holding period. This isn't extrapolated growth; it's anchored to tangible market dynamics—new regulations, category creation, or category consolidation—that shift the earnings trajectory for years ahead. As explored in The Single Source podcast, this principle distinguishes high-conviction bets from speculative positions.
Third, price matters. Duro insists on buying below intrinsic value, creating a margin of safety and raising the probability of hitting the 25% hurdle without requiring perfect execution. This valuation discipline is what separates a return target from a realistic opportunity set.
Concentration and portfolio construction
The strategy's concentrated structure—15 to 20 holdings with the top 10 representing 70–75% of capital—reflects conviction. Unlike diversified funds that dilute winners, this approach forces rigorous position-sizing discipline. Every holding must pass all three pillars simultaneously; mediocre businesses with one or two attractive attributes don't make the cut. This is where the 25% return hurdle acts as a quantifiable filter, preventing position creep into marginal ideas.
Nisheh Goel's emphasis on benchmark and sector agnosticism means the strategy follows conviction, not index weights. If the best 15 opportunities happen to be in telecom and financials, that's where the portfolio sits. This flexibility is what allows the active share to remain consistently high and the return targets realistic.
Where the opportunity lives today
Market dispersion creates the environment for this strategy to thrive. As Nisheh Goel explains in the episode, almost 50% of businesses in the Indian BSE 500 index are down over 30% from their highs, even though the index itself trades only slightly below its 10-year average price-to-earnings multiple. This fragmentation means the best-run businesses in secular growth categories—like India's telecom duopoly or financial services—trade far below valuations that would be justified by their structural competitive advantages alone.
"There is a significant amount of pessimism when it comes to India today. And I do think that pessimism is largely in the price."
Nisheh Goel — Chief Investment Officer, Duro Capital. With 15+ years managing institutional foreign capital into India across multiple market cycles, Goel brings deep conviction to value creation. His thesis centers on identifying companies where negative sentiment has disconnected valuation from structural fundamentals, allowing a disciplined 25% return hurdle to remain achievable without heroic assumptions.
See also
How does EtherStrike's DRRU fit within a portfolio already exposed to traditional commodities or private energy?
The DRRU is positioned as a complement — and potentially a distinct category — relative to futures-based commodity ETFs or private energy plays.
How are EtherStrike's commodity tokens fundamentally different from traditional crypto assets in terms of risk profile?
Unlike traditional crypto or utility tokens, whose floor value is effectively zero, EtherStrike's DRRUs are backed one-to-one by a physical commodity.
Why did EtherStrike choose to focus on non-producing natural resources rather than producing ones?
EtherStrike focused on non-producing resources because that is where the founders identified the largest structural financing gap.
Key takeaways
- Every holding is underwritten to a quantifiable 25% return hurdle, creating a discipline that filters out mediocre opportunities and justifies concentrated positioning.
- The three pillars—defensible competitive advantage, structural earnings compounding, and below-intrinsic-value entry—must align for a position to qualify, reducing false positives.
- Portfolio concentration of 15–20 positions with the top 10 comprising 70–75% of capital forces conviction and prevents dilution of the highest-conviction ideas.
- Significant market dispersion in Indian equities, where half the BSE 500 is down 30%+ from highs despite reasonable overall valuations, creates the opportunity set for hitting return targets without requiring perfect execution.